Implementing competitive strategies: the role of responsive and proactive market orientations

Purpose This study seeks to draw on the strategy implementation approach and the resource‐based view of the firm (RB theory) to investigate the relationships among competitive strategies (i.e. differentiation and cost‐leadership), responsive market orientation (RMO), proactive market orientation (PMO) and firm performance. The purpose is to show that competitive strategies have a significant effect on market orientation and market orientation has a significant effect on firm performance. Design/methodology/approach The paper designed a mail‐survey that was sent to senior executives, which resulted in 189 usable surveys. Data were analysed using partial least squares (PLS) to test the hypotheses. Findings The findings show that both competitive strategies influence RMO and PMO, which then influence firm performance. However, the results show that differentiation strategy has a stronger influence on RMO and PMO than cost‐leadership strategy, and that PMO has a stronger influence on performance than RMO. Research limitations/implications The study examined one set of capabilities (RMO and PMO); research opportunities exist for identifying other firm capabilities (e.g. organisational learning) and their relationships with competitive strategies. Practical implications Strategy implementation is a valid route to firm performance. Therefore, marketing managers must simultaneously develop competitive strategies and RMO and PMO to obtain increased firm performance outcomes. Originality/value The study conceptualises market orientation as RMO and PMO, and suggests that this treatment of market orientation is important in understanding its role in the competitive strategies of firms and consequent firm performance.